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Measuring returns on investment in education: lessons for sustainable and innovative education policy

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  • Hatidza Jahic

    (University of Sarajevo, School of Economics and Business, Sarajevo, Bosnia and Herzegovina)

  • Amila Pilav-Velic

    (University of Sarajevo, School of Economics and Business, Sarajevo, Bosnia and Herzegovina)

Abstract

The relationship between education and labor market is significant and complex. Education increases employment opportunities and reduces the chance of occurrence and duration of unemployment. Earnings, among other things, represent private returns on investment in education and are in the center of the analysis of this article. The main aim of this article is to estimate private and social returns on investment in primary, secondary and tertiary education in selected old and new member states of the European Union (EU) by using two methods (Earnings function and Short-cut method) based on the Mincer equation. Results have shown that there is no statistically significant difference between the estimated private and social returns on investment in primary, secondary and tertiary education in groups of old and new EU members. New members converge towards the old members, at least when it comes to returns on investment in these three education levels. The results also indicate the existence of low and negative returns on investment in education in both old and new EU members. Thus, this article with its new findings contributes significantly to the literature that studies the universality of conclusions on returns on investment in education and the methodology that is used.

Suggested Citation

  • Hatidza Jahic & Amila Pilav-Velic, 2021. "Measuring returns on investment in education: lessons for sustainable and innovative education policy," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 19(2), pages 189-209.
    • Handle: RePEc:zna:indecs:v:19:y:2021:i:4:p:189-209
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    More about this item

    Keywords

    education; education policy; investment; return; Mincer equation; European Union;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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